Longstanding Swedish publisher Paradox is increasingly more difficult to peg as a "niche" PC publisher, ever diversifying from its tradition of strategy titles like Hearts of Iron and Europa Universalis into the online and free-to-play space.

It recently revealed 200,000 units sold for Arrowhead's action-adventure game Magicka and announced upcoming free-to-play MMORPG Salem -- while both are unlikely to be mainstream hits, exactly, it's somewhat new territory for Paradox, which is exploring ways it can benefit from new business models and the rise of new audiences on the PC.

And that exploratory curiosity is paying off. The company reveals to Gamasutra that as 2010 comes to a close, it'll record a 50 percent growth over 2009 -- and 2011 could be even better, on track to show 65 to 70 percent growth over 2010.

"We got a flying start with Magicka this year," CEO Fredrik Wester tells us. "That was really great, and kind of elevated us into the next level. We have some really great things coming out this year, and we have some really high expectations -- to say nothing of 2012. We're happy."

Magicka has been so successful in part because "we finally found the publishing team we're looking for," Wester explains. "We can deliver any type of game these days, and we have a lot of great partners as well that can help us deliver games online with the marketing backing it takes... our partners have helped us tremendously in the past year to grow as a company."

There's more opportunity now than ever for companies like Paradox, opines Wester. "A lot of the bigger publishers -- take [Electronic Arts] and Ubisoft -- have left an open spot for a lot of different types of developers. Take Kalypso's Dungeons, which builds on the reputation of the old Dungeon Keeper games. EA just left that drifting, and we're taking advantage of that, because we're appealing to an older crowd."

And the digital distribution era leaves more opportunities to reach a younger crowd than Paradox had previously as well. "We're not heavy on administration and sales," Wester notes. "We're heavier on the product quality. It's a totally different focus."

In that regard, the company has benefited from its long-term experience with the PC gaming audience, which has earned a reputation for being a bit persnickety. "Our audience traditionally has been very demanding, which is a good thing," Wester notes. "We have to be on our toes all the time. And although we've grown tremendously over the years, I still publish my email address on the forums."

Being directly engaged with the community is key to how Paradox works, although Wester says that as the company's grown, he actually receives less email directly than five years ago -- "because I think people consider us a bigger company now."

In order to keep that close relationship with their audience in the face of considerable growth and diversification, Wester instructs all Paradox employees, no matter what capacity in which they work, to spend time on the games' forums daily. "At least they should read it and see what people like, so that we can feel the general perception of how our games are seen in the marketplace and what our games are doing to the gamers."

In a way, jokes Wester, it's like vacuum and fridge sales as is done at fellow Swedish company Electrolux. Employees who work at the headquarters need experience as a door-to-door salesman first -- "because if you do that, you meet a lot of people and learn a lot about the company and their customers. I like that approach; it's down-to-earth and hands-on. Even if we grow on the staff side by, say, 500 percent, we're still going to have that feeling."

Of course, an unmanageable core team is still far off -- Paradox is only at about 31 employees, though growing. And including the network partner companies with which it works, "we would probably be about 60 full-time employees," Wester suggests. However, factor in the development teams and everyone involved, "we would probably be 250 people working only on the games we produce."

Keeping a "lean and mean" core staff that focuses only on the main duties of publishing and partnering with familiar collaborators for everything else is another key to Paradox's strategy. "Sometimes we tend to feel we drop the ball and we have to react to that ...it's got advantages and disadvantages, but at the moment we can move pretty quick in the direction we want to move, and that's the important thing for me."

"It's no goal in itself to stay small, but it's no goal in itself to grow bigger," notes Wester. "I want to grow in the quality of our games and grow revenue, and then we'll adjust the organization from what comes out of that."

Upping the quality bar on the games it publishes is Paradox's first order of business, Wester says. Magicka had technical problems the company continues to address, but has been successful because of its strength on the content side. But in the future, "hopefully we're going to do both at the same time... I think we're getting there."

"Early in the process, we made sure, and we promised gamers that we're not dropping the ball on Magicka; we know we have issues, and we were very open with what issues we couldn't solve because of the engine and the technical limitations."

One such issue is that most laptops can't play Magicka due to a graphics card limitation. "You can hate us for it; we can refund you, but this is just how it will be," Wester states. "We've patched it 14 times since the release in January; we've been working really hard and made sure to tell people we're working on the problems."

"If there's ever a Magicka sequel -- which I hope we will create at some point -- it will be built on a totally different technology."

But that candor and communication connects Paradox to its community, not only helping with user feedback, but helping to build good brand equity. Reading up on comments and responses to a given product from PC game sites, forums and aggregators is part of Wester's daily routine.

"If I find anything intelligent, I discuss it with our producers; we need to keep close touch with the gamers, because the marketing budgets that we have are so limited that we depend upon people to tell each other the games are great and that Paradox is a great company," he says. "We do have a long-term relationship with our products, and we do release patches for products years after release. We're not like Blizzard... but I hope we're getting there."

Wester says the company is already on its way -- its financial situation is at last stabilized, for one big thing. "We're no longer forced to release products just because it's a cash flow issue," he says. "I'm not saying it'll never happen that we'll release a product due to cash flow issues, but for the forseeable future, it will not be a big problem."

"And I hope people will see in the coming year, year and a half, that slowly and surely the quality of our products will increase," Wester adds. "Our entire team is working on Crusade of Kings, too -- we're in alpha a year before release and that has never happened in the history of our company; that's a really good feeling. We're turning into a real company and that's awesome."

"I hope it's going to show in our games, and not that we're getting sloppy because we're having a better financial situation. Normally people work better when their environment is stable."